Apollo Management on the Flavor of Shale

The promise of oil and natural gas locked up inside of vast shale formations under the the United States is not an attractive investment opportunity to Apollo Management founder Leon Black.

"Shale! It's a huge flavor of the month. Maybe of the next few years," Black said at the Milken Institute's Global Conference in Beverly Hills, California.

He explained that Apollo follows a contrarian approach to investing that tries to avoid buying "flavors of the month."

"Oil companies are selling proven reserves that they consider too boring. Putting a lot of capital into shale. So we're buying the boring proven reserves. We see that as a very good investment opportunity," he said.

Fellow private equity kingpin David Bonderman, the founder of TPG Capital, said that his company had developed its own approach to investing in natural resources.

"We have developed a thesis that use of natural resources will grow.

But we don't know what the price will be. So we look to profit on volume, regardless of price," he said.

Some strategies for profiting from volume include investing in refineries and pipelines, Bonderman said.